Software Patents John F. Duffy Professor of Law George Washington University School of Law © 2006 John F. Duffy

What Good Are Patents? (The Standard Story) Investments Research Basic Idea or Goal Patent Application More Research and Development Patent Issues Product Ready for Market Patents allow for the recovery of investments made in research and development. Time 

What Happens Without Patents? Investments Basic Idea or Goal Research and Development Copies Appear Product Ready for Market Without patents, successful products attract copyists so that investments in research and development cannot be recovered. Time 

Is “Software” Different? Investments Basic Idea or Goal Research and Development Copies Appear Product Ready for Market Without patents, successful software (as opposed to other products) cannot simply be copied; investments can be recovered. Time  Copyright protection

Is Software Different? Fuzzy boundaries – very common problem throughout patent law. Multiple innovation products – again very common across industries (railroads, aircraft, refining, electronics). Small firms – seems relatively common (though small firms can become large quickly if successful, e.g., Bell, Xerox, Google). Distributed innovation – not limited to software.

Are the Problems with Software Patents Not Different? Investments Basic Idea or Goal Production Building, Market Testing and Market Risk Lawsuits Appear Product Ready for Market With obvious patents, successful products attract lawsuits that discourage investments in the development of new products and businesses. Reverse free-rider problem. Time 

Are the Problems with Software Patents Not Different? If we observe many patent lawsuits against independent invention where the independent inventors themselves were not planning to seek patent protection, then the patent system is not working well. Very hard to collect data on this issue.

Is Software Different? Patentable Subject Matter § 101. Inventions Patentable Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title. Should “process” cover data processes?

Patentable Subject Matter Statutory section has been limited by judicial construction so as to include claims to abstract ideas, laws of nature and physical phenomena.

Patentable Subject Matter First American case in the series: O’Reilly v. Morse: “Eighth. I do not propose to limit myself to the specific machinery or parts of machinery described in the foregoing specification and claims; the essence of my invention being the use of the motive power of the electric or galvanic current, which I call electro-magnetism, however developed for marking or printing intelligible characters, signs, or letters, at any distances, being a new application of that power of which I claim to be the first inventor or discoverer.”

Patentable Subject Matter: Morse Case 1753: An author identified only as “C.M.” publishes “An Expeditious Method of Conveying Intelligence” in a Scottish journal. The article suggests stringing between distant points wires equal in number to the letters of the alphabet; communications could then be made by imparting sufficient electric charge to move a small ball or bell at the other end of the wire. 1774: George Louis Le Sage of Geneva constructs a telegraph with separate wires corresponding to the letters of the alphabet. The device is similar to that suggested by the earlier Scottish writer; electrical charge imparted on one end of the wire moves small pith balls on the other end. Le Sage’s device functions but is not commercialized. 1816: Dr. John Redmond Coxe, a chemistry professor at the University of Pennsylvania, publishes an article suggesting that the power of electric current to decompose water could be harnessed for communications. 1820: Danish scientist Hans Christian Oersted discovers the relationship between electricity and magnetism. Soon thereafter, “it was believed by men of science that this newly-discovered power might be used to communicate intelligence to distant places.” Morse, 56 U.S. at 107.

Patentable Subject Matter: Morse Case 1831: In Albany, New York, Professor Joseph Henry constructs an electric device that rings a bell at the end of a mile-long length of copper wire. Henry mentions to his classes that the bell could be used for signaling and publishes an article discussing the possibility of electric telegraphs. Carleton Mabee, The American Leonardo: A Life of Samuel F. B. Morse 191 (1943) (noting that “if sound telegraphs are to be considered telegraphs — and they were the common forms at Morse’s death — Henry’s [bell ringing device] was a telegraph”). 1832: On a transatlantic voyage, Morse first considers the possibility of using electric current for long distance communication. Morse apparently believes his idea to be original even though by this time, as the Supreme Court notes, “the conviction was general among men of science everywhere” that an electromagnetic telegraph could be produced. Morse, 56 U.S. at : Four inventors, Morse, Steinheil (German), Wheatstone and Davy (both English), invent “so nearly simultaneously, that neither inventor can justly be accused of having derived any aid from the discoveries of the other.” Id., at 108..”

Patentable Subject Matter: Bell Case Second Great American case in the series: “The Telephone Cases”: “5. The method of, and apparatus for, transmitting vocal or other sounds telegraphically, as herein described, by causing electrical undulations, similar in form to the vibrations of the air accompanying the said vocal or other sounds, substantially as set forth.”

Patentable Subject Matter: Bell Case Second Great American case in the series: “The Telephone Case”: “It had long been believed that if the vibrations of air caused by the voice in speaking could be reproduced at a distance by means of electricity, the speech itself would be reproduced and understood. How to do it was the question. Bell discovered that it could be done by gradually changing the intensity of a continuous electric current, so as to make it correspond exactly to the changes in the density of the air caused by the sound of the voice. This was his art.”

Patentable Subject Matter: Benson More recent American case in the series: Gottschalk v. Benson (1972): Claims are invalidate as too abstract: “The method of converting signals from binary coded decimal form into binary which comprises the steps of “(1) storing the binary coded decimal signals in a re-entrant shift register, “(2) shifting the signals to the right by at least three places, until there is a binary ‘1’ in the second position of said register, “(3) masking out said binary ‘1’ in said second position of said register, “(4) adding a binary ‘1’ to the first position of said register, “(5) shifting the signals to the left by two positions, “(6) adding a ‘1’ to said first position, and “(7) shifting the signals to the right by at least three positions in preparation for a succeeding binary ‘1’ in the second position of said register.”

What Good Are Software Patents? Example: Google is built on a a few key software patents. = $123 Billion

Google’s Patents " The first version of the PageRank technology was created while Larry and Sergey attended Stanford University, which owns a patent to PageRank. The PageRank patent expires in We hold a perpetual license to this patent. In October 2003, we extended our exclusivity period to this patent through 2011, at which point our license is non- exclusive."

Google’s Patents A computer implemented method of scoring a plurality of linked documents, comprising: obtaining a plurality of documents, at least some of the documents being linked documents, at least some of the documents being linking documents, and at least some of the documents being both linked documents and linking documents, each of the linked documents being pointed to by a link in one or more of the linking documents; assigning a score to each of the linked documents based on scores of the one or more linking documents and processing the linked documents according to their scores.

Fields Ripe for More Software Patents Compression technology Language translation software Financial software Security Voting software Communications and interoperability These and many other fields are waiting for their Googles.

Conclusion The case for patents in the software industry is not different in theory from the case for patents in other industries. Software patents can help small innovative firms. There are lots of problems with current patent law, and some of those problems are especially affecting the software industry.